ASIC Corporations (Repeal) Instrument 2016/896

Overview

The ASIC Corporations (Repeal) Instrument 2016/896 was enacted by the Australian Securities and Investments Commission (ASIC) under subsection 1075A(1) of the Corporations Act 2001. This instrument was introduced to repeal ASIC Class Order [CO 02/284], which was due to sunset on 1 October 2016, in line with the automatic cessation of legislative instruments under the Legislative Instruments Act 2003. ASIC determined that [CO 02/284], which applied certain provisions relating to takeovers in the articles of association of James Hardie Industries N.V. to holders of CHESS Units of Foreign Securities, was no longer necessary or useful. The policy objective of this repeal is to ensure that the legislative framework remains current and relevant, reflecting that the necessary provisions are already covered under other parts of the Corporations Act and the ASX Settlement Operating Rules. The repeal was subject to consultation, and no feedback opposing the repeal was received. The instrument is compatible with human rights as it does not engage any of the applicable rights or freedoms.

Scope and Application

The ASIC Corporations (Repeal) Instrument 2016/896, made under the Corporations Act 2001, serves to repeal ASIC Class Order [CO 02/284], which had previously allowed certain provisions relating to takeovers in the articles of association of James Hardie Industries N.V. (JHI) to apply directly to holders of CHESS Units of Foreign Securities (CUFS). This repeal is intended to ensure that the instrument does not automatically sunset after its ten-year period, as required by the Legislative Instruments Act 2003, and to reflect ASIC's determination that [CO 02/284] is no longer necessary or useful within the current legislative framework. The repealed instrument applied to CUFS issued by JHI and quoted on the ASX, treating them as Division 4 financial products and binding holders to the terms of the JHI constitution, among other provisions. The repeal of [CO 02/284] aligns with existing legislative provisions, including the ASIC Corporations (Division 4 Financial Products) Instrument 2015/1010 and the ASX Settlement Operating Rules, thereby ensuring that the regulatory requirements for such securities are adequately covered. ASIC consulted on the repeal with JHI and other stakeholders, finding no opposition to the decision, and the Office of Best Practice Regulation confirmed that a Regulatory Impact Statement was not necessary for the making of this instrument.

Key Provisions

The ASIC Corporations (Repeal) Instrument 2016/896 (paragraph 3) primarily serves to repeal the ASIC Class Order [CO 02/284], which previously allowed certain provisions relating to takeovers in the articles of association of James Hardie Industries N.V. to apply directly to holders of CHESS Units of Foreign Securities (CUFS). This repeal is enacted under the authority granted by subsection 1075A(1) of the Corporations Act 2001 (paragraph 1), which empowers the Australian Securities and Investments Commission (ASIC) to declare that specific parts of the Act apply as if certain provisions were omitted, modified, or varied. This legislative instrument thus nullifies the application of [CO 02/284], effective from the date of its enactment. ASIC has determined that the provisions of [CO 02/284] are no longer necessary or useful, as they are sufficiently covered by other existing legislative instruments. Specifically, ASIC Corporations (Division 4 Financial Products) Instrument 2015/1010 already classifies all CUFS as Division 4 financial products, and the ASX Settlement Operating Rules replicate the effects of [CO 02/284] regarding the operation of the CUFS issuer's constitution and the terms under which a depository nominee holds the underlying securities. This redundancy makes [CO 02/284] obsolete. Additionally, ASIC has engaged in consultations, including with James Hardie Industries N.V., to ensure that the repeal does not negatively impact stakeholders. Entities and individuals governed by [CO 02/284], particularly those dealing with CUFS issued by James Hardie Industries N.V., must now comply with the Corporations Act 2001 and the ASX Settlement Operating Rules without the specific provisions of [CO 02/284]. This shift necessitates an understanding of how the repealed class order’s provisions have been subsumed into the broader legislative framework. Entities should review their compliance protocols to ensure they adhere to the new regulatory environment, particularly in relation to takeovers and the enforcement of operating rules. Breaching the provisions that were part of [CO 02/284] and are now governed by other instruments could result in civil or criminal penalties under the Corporations Act 2001. For instance, failure to comply with the ASX Settlement Operating Rules could lead to an aggrieved party seeking judicial remedy under section 822C(1) of the Act. Penalties for non-compliance can vary, but may include fines and other sanctions as prescribed by the Act. It is crucial for entities to remain vigilant and ensure their practices align with the updated legislative requirements to avoid any potential legal repercussions.